Friday, May 4, 2018

Melco Resorts & Entertainment will not resort to junket operators to bring VIP customers to the new tower at its City of Dreams Macau integrated resort, Lawrence Ho, CEO and Chairman of the major developer, has said.

Melco is set to open the Morpheus tower at City of Dreams Macau next month. The tower will feature over 770 hotel rooms and a number of amenities for visitors and overnight guests, including gaming tables and event venues. It will primarily target premium mass market customers.

The major hotel and casino developer is planning to make the rare move of ditching middlemen to help it lure wealthy high roller players to the newest addition to its portfolio. It has been a popular practice for Macau’s casino resort operators to partner with junket companies that would refer players to their gaming floors.

Melco’s move comes after the government of Macau, the only place in China where casino gambling is legal, has urged the city’s six licensed casino operators to reduce their reliance on VIP players and to try to draw more mass market customers to their properties by diversifying their offering.

Pressure from Macau lawmakers escalated after Chinese President Xi Jinping launched an anti-corruption campaign that resulted in high rollers from Mainland China withdrawing from the casino hub in a bid to avoid being swept into the crackdown. As a result, Macau’s gambling revenue dropped dramatically, which subsequently affected the city’s whole economy.

City On The Rebound

April revenue from Macau’s casinos spiked 28% year-on-year, marking the 21st straight month of gains. The city’s operators took into consideration the government’s recommendations and diversified their offering in a manner that would make their properties more attractive to mass market customers.

While VIP players still bring more than a half of the revenue generated at Macau’s gaming floors, casino owners are positive about the potential of the premium mass market segment.

Mr. Ho has too been bullish on that particular group of visitors and the fact that his company’s newest addition will target mass market visitors indicates his confidence.

The businessman also expressed confidence about Macau’s growth this year. He said he expects gross gambling revenue at the popular gaming hub to rise around 20% in 2018, thus exceeding market projections for an increase in the high-single- to low-double-digit range.

Aside from Macau, Melco currently operates a casino resort in the Philippines and is building a €500-plus-million resort in the Republic of Cyprus. The company is eying Japan as its next expansion destination.

Mr. Ho said in a recent interview with Bloomberg that he has been lobbying heavily in that country for over a decade now and that Melco is ready to bet big on its gaming and hospitality markets. Japan legalized casino gambling within integrated resorts in late 2016 and is currently looking to set out the rules under which such properties would be built and operated along with their gaming floors.